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Section 1.165-9(a), Income Tax Regs., provides that a loss
sustained on the sale of a residence used by a taxpayer as his or
her personal residence up to the time of sale is not deductible
under section 165(a). Harris v. Commissioner, T.C. Memo. 1982-
410, affd. on other issues 745 F.2d 378 (6th Cir. 1984).
In light of the evidence indicating petitioners' personal
use of this residence, we sustain respondent's disallowance of
this claimed loss. The fact that petitioners may have worked in
the vicinity of this residence at the offices of LCOR does not
convert petitioners' personal use of this residence into business
use. Further, petitioners' alleged rental of this residence to
their son in 1984 does not qualify the 1986 sale of the residence
as a sale of business property. We sustain respondent's
adjustment on this issue.
Gain on Transactions Relating to Christa Oil Co. Stock
On November 26, 1985, Eva sold back to Christa Oil Co.
(Christa Oil), a closely held family company, 333 shares of
Christa Oil stock. In exchange, Eva received from Christa Oil
$100,000 in cash and a partial interest in three oil leases.
Petitioners state that Eva's tax basis in the 333 shares of
stock sold to Christa Oil was $333. On petitioners' 1985 joint
Federal income tax return, petitioners reported a capital gain of
$647,973 relating to the sale of this stock.
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